Question

Which of the following methods for establishing the value of a business is associated with the...

Which of the following methods for establishing the value of a business is associated with the correct disadvantage of using that​ method?

A.Adjusted earnings method

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failing to take into account the future​ income-generating potential of the business.

B.Adjusted earnings method

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selecting an unrealistic earnings multiplier.

C.Balance sheet technique

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selecting the incorrect discount rate.

D.Discounted future earnings approach

dash–

failure to consider the future earning potential of the company.

E.Adjusted balance sheet technique

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inability to establish a reasonable value for the​ company's goodwill.

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Answer #1

The answer is option A .Adjusted earnings method -

failing to take into account the future​ income-generating potential of the business.

Actually the disadvantage listed is false because, it takes into Account the future earning potential of the business, that is the reason they come up with multipliers in this method.

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